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As businesses and e-commerce merchants continue to embrace globalized growth strategies, cross-border payments are essential to their expansion plans into new countries. Unfortunately, cross-border payments have traditionally been notoriously slow, complex and costly; but all of that is changing thanks to payments orchestration.
What are cross-border payments?
A cross-border payment involves a monetary transaction between financial institutions, businesses, or individuals operating in different countries. These transactions might include wire or ACH transfers, credit or debit card payments, digital wallet transactions, peer-to-peer transfers or paper checks.
According to Juniper Research, there were nearly $40 trillion cross-border payments between global businesses in 2024 alone.
Like any monetary transaction, cross -border payments begin with an initial purchase using a specific payment method, followed by transaction authentication, processing and settlement process with various parties involved at each step.
But unlike a domestic transaction, cross-border payments involve a number of complex factors.
Challenges of cross-border payments
Currency conversion
Cross-border transactions typically involve a change in currency, which requires merchants to navigate exchange rates along with applicable taxes, foreign transaction fees or interchange fees (if a credit or debit card is involved.) These rates and fees can fluctuate rapidly, significantly impacting a merchant’s profit margin on each transaction.
Payment methods diversity
Payment preferences vary greatly from one country to another. While credit cards may dominate in the U.S., digital wallets, bank transfers, or local card schemes might be preferred in other regions. Catering to these diverse payment methods is crucial for customer experience but can be a challenge for merchants to implement.
Compliance with local regulations
Every country has its own tax laws, data privacy requirements, and regulations that will impact a cross-border payment. Staying compliant in multiple jurisdictions is a major challenge, especially as regulatory landscapes change frequently. Failing to comply can result in hefty fines and lost customer trust.
High decline rates for cross-border payments
Because cross-border transactions are more difficult for processors and fraud prevention systems to verify, they sometimes experience higher decline rates. This can result in lost revenue and negatively impact the customer experience.
How payment orchestration solves cross-border payment challenges
Cross-border payments have become one of the key use cases for payment orchestration - the process of centralizing multiple payment methods, gateways and processors through a single integration.
Smart routing for global payments
One of the most powerful features of payment orchestration is smart routing. Smart routing intelligently directs every transaction to the payment gateway or acquiring bank that is most likely to approve it based on factors like location, currency, and payment method. For cross-border payments, smart routing can help increase approval rates and reduce the risk of transaction failures due to regional complexities.
In the case of a failed transaction, payment orchestration can implement fallback routing—automatically redirecting the payment to another gateway or acquirer. This proactive approach to rerouting significantly reduces failed transactions, ensuring a smoother customer experience and preventing revenue loss.
Currency conversion optimization
Payment orchestration platforms offer real-time currency conversion to enable instant processing of multi-currency transactions. By providing accurate, competitive rates and handling the conversion process within the platform, businesses can reduce costs and improve transparency for their customers.
Regional payment method preferences
Payment orchestration enables merchants to customize their checkout experience to display the payment methods that resonate most in the regions they are targeting. For example, a customer located in Brazil might see Boleto Bancário as a payment option, while a shopper in Germany may prefer SOFORT banking. This localization improves user experience and boosts conversion rates by allowing customers to pay using their preferred methods.
Supporting regional payment gateways
To meet the diverse needs of global markets, payment orchestration platforms integrate with local banks and alternative payment methods such as mobile wallets and regional cards. This integration enables businesses to access a wider array of payment solutions, increasing their chances of successful transactions and establishing a stronger presence in each market.
Regulatory compliance
Global payment orchestration platforms help companies comply with local tax laws, data privacy regulations, and financial standards across different jurisdictions. By automating adherence to these complex requirements, merchants can ensure smooth payment operation without legal complications. For example, they can accommodate region-specific compliance needs like the European Union’s GDPR or Brazil’s LGPD.
Fraud prevention on a global scale
When handling cross-border transactions, the risk of fraud increases. Payment orchestration platforms employ advanced fraud detection algorithms and machine learning to analyze transaction patterns, automatically distinguishing between genuine purchases and potential fraud. This not only minimizes false declines, but also offers robust protection against fraudulent activities on a global scale.
Key features to look for in a payment orchestration platform
Global scalability
When selecting a payment orchestration platform to support cross-border payments, global scalability is a crucial feature. Ensure the platform supports a wide range of countries, currencies, and payment methods to allow for seamless international expansion without needing multiple integrations for each market.
Unified dashboard for global insights
A centralized dashboard is invaluable for providing a clear view of global payment activity. Businesses can track transactions, measure gateway performance, and gain insights into customer payment behavior, all in one place. This unified approach to payment data helps companies make informed decisions quickly and adjust strategies as needed.
Real-time currency conversion and fraud protection
Operating internationally requires a platform that offers real-time currency conversion to ensure fair and transparent pricing for customers. Equally important is robust fraud protection, leveraging machine learning to prevent fraud while minimizing the risk of false positives. Both features are critical for maintaining trust and profitability in cross-border transactions.
By addressing the complexities of cross-border payments and offering solutions like smart routing, regional payment integration, and advanced fraud prevention, payment orchestration platforms are reshaping how global businesses manage and optimize their transactions.
As a leading global payment orchestration platform, Yuno helps businesses simplify cross-border payments by allowing them to integrate over 300 payment methods through a single API, boost conversion rates, and optimize their payment strategy.
Discover why Yuno is the payment orchestrator of choice for high-performing payments teams - book a demo and join the payment revolution.
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